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China has the largest concentration of Bitcoin-related activities

The increasing level of interest in the Blockchain technology that underlies Bitcoin – going by several initiatives that have been introduced of late – indicates a future trend that would make China the top-runner in the digital currency sphere in a few years.

A research paper that details Blockchain’s benefits was recently published by the Chinese government though it did not endorse Bitcoin. The 70-page report signaled Beijing’s interest to set up international standards for the technology as it urged Chinese firms and organizations to be active in setting the agenda globally. China also hosted the First World Blockchain Conference in October for global players to share ideas.

These encouraging moves to introduce Blockchain into the cash-run Chinese economy will present people in the most populous country in the world with a viable platform to make their currency RMB go digital and integration easily into the global economy.

Though not much of Bitcoin has appeared in the picture, the fact that China has the largest concentration of Bitcoin-related activities points to a confluence in the making for Blockchain to meet its digital asset as long as this level of interest continues.

The impending outcome of the meeting would likely truncate the skepticism that always go with the suggestion that Bitcoin should not be separated from the Blockchain technology as shared by an academic.

A professor that teaches Bitcoin and Blockchain technology at the Politecnico di Milano, Italy, described the notion that the Blockchain technology should be separated from the native digital currency it powers, Bitcoin, as absurd.

Prof. Ferdinando Ametrano, who told ether.camp in an interview on the sideline of the Blockchain: Money conference in London this month that he started teaching on Bitcoin and the Blockchain because he perceived there is a misunderstanding of issues surrounding them, shares a different view from that which emanated from several discussions that suggest that the technology should be separated from its native digital asset.

Prof. Ferdinando Ametrano from the Politecnico di Milano, Italy being interviewed by ether.camp at the Blockchain Money conference in London photo credit:ether.camp

“I must confess that the whole Blockchain hype, I don’t understand that… I’d understand that there’ll be many blockchains. I don’t think Bitcoin would be the only one. But blockchain without native digital asset? To me, that would be nonsense!” Ametrano said in the video interview. “I mean, if you don’t have a currency, a coin, which has some value, to reward miners for distributed consensus, then you have to appoint validators for such transactions. Why should you use a Blockchain which is a subpart data structure upend only very convoluted made to be mutable while you can – since you are trusting your appointed validator – just use database technology which could be perfectly fine?”

It is noteworthy that some large global corporations have invested hugely into the Blockchain technology. In its The Future of Financial Infrastructure report, the World Economic Forum described the Blockchain – or Distributed Ledger Technology – as having captured the imaginations and wallets of the financial services ecosystem with 80% of banks predicted to initiate projects with it by 2017 and over US$1.4 billion in investments already made into the technology in the past three years.

However, despite the report says that more than 90 central banks are engaged in Blockchain-related discussions worldwide, which point to growing global interest, most of them do not want their institutions to own or use Bitcoin itself. Rather, they prefer to use Blockchain for their decentralized method of record-keeping for its quicker and transparency attributes.

Top central banks including the Bank of England and the People’s Bank of China have proposed to issue their national currencies onto some sort of distributed ledger to allow them track every unit of their currencies as it travels through the financial system which has not been possible up till now.

While these moves are considered laudable, using a Blockchain without an active digital asset to achieve their ultimate goal, as Ametrano stated in his interview, makes it just a database. He says:

“I do realise that people are progressively understanding the ability to enhance the current database technology with cryptographic technique. (It’s) what I call database on cryptographic steroids. But they are still databases. Of course, to say that you have a startup which is working on databases is not cool enough to get money so you prefer to say it’s Blockchain. It’s completely different (to) when we are talking about Ethereum or Bitcoin or ZCash or Monero which are blockchains with an active digital asset which can be used to reward agents in the system which are providing some real distributed service in a way.”